While nearly everyone is looking for an excuse to sell, coming up with ridiculously low targets for the upside from here before the market tops, there is an interesting technical development taking place that deserves the attention of every investor.
Before we get to the development itself, it's important to know that risk moves in waves.
Put as simply as possible," risk on" moves sequentially from conservative risk, to mild risk, to real risk, to insane "mortgage the house" risk.
You know the phase of "risk on" we are in by what assets move the most.
As it stands now, I'm seeing the more aggressive "risk on" names in both equities and crytpo consolidating along their bases in a move up that is yet to occur.
What this tells me is that aggressive investors have yet to bite into this market. In fact, they aren't even close according to the patterns that are emerging in the market.
ARKK is the most obvious example of this:
This isn't an extension in price.
This isn't euphoria.
This isn't even embracing the current rally.
This is a continued base that has yet to attract the attention of investors.
This is far from aggressive risk taking.
In fact, it's the bubbling of "risk on" developing beneath the surface of the market.
For the record, we've been long ARKK in the Zenolytics portfolio since the mid-3o range, taking the position in mid-June.
When we took the position I was confident in the outcome being exponential in nature. What I am surprised by two months into the trade is how long it is taking for investors to catch on.
Far from being a negative aspect of the trade, this is in fact monstrously bullish, as the upside remains significant for speculative assets, with no signs whatsoever of froth.
With that said, time to up the risk, by taking positions in mild risk - "mortgage the house" type of risk assets before the herd catches on. I expect them to come in droves over the next few months, at which point, we'll begin taking some profits off the table.
Working on the weekly Turning Points note now going over these ideas. Will be released tomorrow.
The bottom line: You're not bullish enough.
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